The theme of the WEFAfrica 2017, “Achieving inclusive growth through responsive and responsible leadership”, could have been an appropriate and founding moral code and political philosophy for the incoming democratic government at the beginning of the transition period in 1994 because it captures, in a simple but profound manner, the essence of what needed to be done to reverse the racist practices of the colonialists and the apartheid regime that had existed for centuries.

The liberation struggle was premised on defeating apartheid and putting in place a democratic dispensation underpinned by the rule of law and human rights. This responsibility required a leadership that is motivated by a high moral code and a framework of values that put a high sense of consciousness for social justice at the centre.

However, 23 years into the transition period, serious questions are being raised about the pace of change and the extent of its inclusiveness as well as a breakdown in governance. Too many people legitimately feel left out of the democratic dividend and are now furiously calling for faster socio-economic transformation.

The legitimate and loud calls for “Radical Economic Transformation” reflect the shortcomings of our development strategy and trajectory that has left millions of poor and under-educated people out of employment and other opportunities for self-improvement. Many people, including some in the new middle class, have expressed their frustrations with what is perceived as “White Monopoly Capital” as the biggest constraint and barrier to inclusive growth and development. But resorting to slogans that clearly mask weaknesses in policy and strategy execution will not change the stark realities that confront us.

It may be helpful therefore in the circumstances to interrogate the context we inherited at the dawn of democracy and how we may best handle these increasing and strident new calls for a new and radical approach to economic transformation that is also radical and inclusive.

The apartheid legacy was profoundly challenging and daunting in material terms. The ANC-led democratic state was confronted with:

The reduction of racialised unemployment, poverty and inequality

The comprehensive and radical transformation of the economy to better reflect the country’s demographic profile

The creation of a just and inclusive society in which the consciousness for social justice is the norm

An economy that was in junk status and burdened with a crippling debt that was accumulated by the apartheid regime

Legitimate expectations from those that were previously excluded that the new democratic dispensation will bring immediate and better prospects for them

The progressive consolidation and realisation of the democracy and society envisaged in our Constitution

Under these circumstances the ANC-led government had a moral obligation to respond to these challenges through a comprehensive set of social welfare grants and other benefits, such as rolling out free housing, access to electricity and water in order to mitigate the crippling effects of poverty and inequality.

However, the ability to sustain this vital commitment had to be underpinned by building a healthy and resilient financial position of the state. Therefore, implementing fiscal discipline and reducing the national debt that was limiting expenditure allocations was indeed top priority. Building a strong, credible and competent Treasury and SARS necessarily became a compelling and urgent need. This was not an easy policy and strategy to execute but ultimately we manged to reduce our budget deficit from 4.5% of GDP in 1994 to a surplus of 1.0% in 2008. Government debt also fell from 43% of GDP in 1994 to 27% in 2009.

This is the consolidation we needed to achieve in order to create a solid basis for more aggressive socio-economic transformation going forward.

Notwithstanding these impressive achievements, the contextual reality that confronts us is that more than 23 years after apartheid, far too many South Africans live in poverty. The principal reason for this, and for our enormous inequalities, is that far too few South Africans are employed. This has serious implications for our politics and stability and the populist declarations that are being made by the ANC and its affiliate organisations are a response to this reality and the fact that electoral loss in 2019 is now a real prospect following its dismal performance in the 2016 local elections. What then should have been done to avoid the current situation? What follows are some of the critical policy choices we needed to have executed successfully.

First; building a capable and efficient state and supporting state institutions at the three levels of government is, and continues to be, a top priority in the context of high and growing inequality, poverty and unemployment. Efficient service delivery is impossible without achieving visible success on this question. There is no doubt that the ANC perfectly understood this compelling necessity however, in the last ten years, the biggest focus and energy of the current administration was diverted to building a very successful patrimonial state staffed with incompetent but compliant cadres. And this objective has been achieved successfully. This is at the heart of the under-performance and rot that has been documented at the key institutions of state and state owned enterprises.

The collapse of governance at all levels indicates a state of mind of a leadership that had deviated from the mantra of a ‘responsive and responsible leadership’ that motivated the generation of Mandela. As a result, the promise of a better life for all especially at the local level remains a distant dream.

Second; South Africa’s economy has been characterised as having very high levels of concentration and vertical integration and that it is also capital intensive. The large number of very serious anti-competitive behaviour cases in the market place attest to this view. There is also a credible view that it marginalises and excludes the small and medium enterprise sector. This is the challenge that has been at the centre of the challenge and need for radical economic transformation and democratisation.

But what has been missing is a highly focused strategy and determination to fortify our competition laws and progressively, but aggressively, break the monopolies and oligopolies that still define our economic framework twenty three years into democracy. Why have we been hesitant in pursuing an aggressive strategy on this issue? Is it because politically connected individuals sit on the boards of these companies that could have been the target of such aggressive policies?

Third; policy uncertainty and confusion contributes negatively to creating an investor and business friendly environment. The fundamental question we have to deal with is whether the current menu of growth policy strategies: Reconstruction and Development Programme (1994), Growth, Employment, and Redistribution (1996), Accelerated and Shared Growth Initiative-South Africa (2006), the New Growth Path (NGP of 2010) and the NDP, will indeed deliver the desired outcomes. We have also been introduced to the “Nine Point Plan” which now seems to be overtaken by a new populist catchphrase “Radical Economic Transformation”.

Johannes Fedderke states that “There is not one country in the world that has addressed the problem of poverty without first getting on to a high growth trajectory. Growth is not a sufficient condition for solving the problem of poverty but it is certainly a necessary condition”. Until more than a month ago some of us were reluctantly convinced that the green shoots of potential better growth prospects were beginning to show. But all this has been destroyed by the junk status that the president has so recklessly and senselessly gifted us.

How we manage to grow out of this quagmire depends on how the new minister of finance, with the support of the president, manages to maintain a steady policy certainty and terrain and rebuild a credible social pact with the domestic investor community. Investment in all the areas that have been identified as critical to triggering renewed domestic investment appetite will not happen until the trust that has been destroyed is restored in the shortest period. And this has become very urgent in the context of stagnant economic growth and possible recession.

Finally;

the dysfunctional failure of the education system that happened under our watch is unconscionable and must be fixed without delay. Accountability is at the centre of failure in this area as it is in all other areas of the state system.

There is an urgent need to revisit the Constitution and strengthen the powers of the voters to enforce accountability.

Lifting the standard of governance and ethical leadership and embracing a high level of consciousness for social justice must underpin everything we intend to do to reverse the current trend and eliminate the cancer of corruption that is suffocating the entire state system.

Against this moral framework, the current leadership manifests gaping fault lines and shortfalls that can only be corrected by a total leadership overhaul at all key levers of power. For this to happen, the ANC must act quickly and decisively.

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Thabang is a very experienced and leading strategy consultant with more than 20 years of executive management experience. His forte and focus as an organizational strategist concerns helping organisations develop vision aligned strategies and deal with repositioning challenges in changing market environments while maintaining a sustainable and competitive advantage. www.lenomostrategicadvisory.co.za
He is a graduate of the University of Botswana, Lesotho and Swaziland. He has also completed the Harvard Senior Executive Programme.